EXHIBIT 99.1
CONTACT: | Janine Dusossoit | |
| Vice President, Investor Relations | ||
| Safeguard Scientifics, Inc. | ||
| 610-975-4952 |
SAFEGUARD ANNOUNCES 20% INCREASE
IN SECOND QUARTER 2005 REVENUES
IN SECOND QUARTER 2005 REVENUES
Significant Progress in Reducing Operating Losses
at Consolidated Companies
at Consolidated Companies
Wayne, PA, August 3, 2005 —Safeguard Scientifics, Inc. (NYSE: SFE), a strategic growth partner for information technology and life sciences companies in the Time-to-Volume stage of development, today announced its operating results for the second quarter of 2005.
“We are very pleased with the revenue growth achieved by our companies in the second quarter,” said Anthony L. Craig, President and Chief Executive Officer of Safeguard. “All five consolidated companies made significant progress toward achieving profitability as they continue to scale their businesses.”
For the three months ended June 30, 2005, Safeguard’s consolidated revenues from continuing operations (which included Laureate Pharma) were $48.0 million, up 20% from $39.9 million in the second quarter of 2004. Net loss from continuing operations in the second quarter of 2005 was $7.7 million, or $0.06 per share, compared with net income from continuing operations of $10.2 million, or $0.08 per share in the second quarter of 2004. The 2004 results included $30.0 million of other income primarily associated with sales of companies.
For the six months ended June 30, 2005, Safeguard’s consolidated revenues from continuing operations were $90.9 million, up 15% from $78.8 million in the first six months of 2004. Net loss from continuing operations in the first six months of 2005 was $23.8 million or $0.20 per share compared to net income from continuing operations of $4.4 million or $0.04 per share in the year-ago period. The 2004 results included $40.5 million of other income primarily associated with sales of companies.
“Clarient, Mantas, and Pacific Title all recorded strong increases in revenues in the second quarter of 2005 compared to the year-ago quarter,” said Christopher Davis, Executive Vice President and Chief Administrative and Financial Officer of Safeguard Scientifics. “These companies, along with Alliance Consulting, all reported improved operating results in the second quarter of 2005.”
Revenues at Clarient (NASDAQ: CLRT), a technology and service resource for pathologists, oncologists and the pharmaceutical industry, jumped 118% in the second quarter of 2005 compared to the same period last year. Significant growth at its diagnostic laboratory services business and increased sales of its proprietary ACIS® systems contributed to the gains.
Laureate Pharma, which provides bioprocessing and drug delivery services to support the development and commercialization of pharmaceutical and biopharmaceutical products, contributed $3.8 million of revenues in the second quarter of 2005, an increase of 43% from the first quarter, its first quarter as a Safeguard company. Safeguard acquired Laureate Pharma in December 2004 and is helping the company scale its business through an expanded marketing and sales effort.
At Mantas, a leading provider of sophisticated analytic applications that address risk management, fraud detection, anti-money laundering and trading compliance, revenues grew 47% over the prior year second quarter as a result of strong growth in services as well as increased product license revenue. At June 30, 2005, backlog was $44 million compared to $37 million at March 31, 2005.
Pacific Title, which provides high technology digital and other specialized post-production services to the Hollywood motion picture and television industry, achieved 15% growth in revenues compared to last year’s second quarter, reflecting an increase in trailer production as well as expanded new digital intermediate services.
During the second quarter of 2005, Alliance Consulting, which provides custom software solutions and IT consulting services to Fortune 2000 clients, achieved improved operating results and reached break-even despite a modest decline in revenues compared to the year-ago quarter. At that time, Alliance was engaged in a significant post-merger integration project for its largest customer. Alliance continues to successfully deploy its new, higher-margin Global Delivery and Master Data Management services.
“At the Parent Company level, Safeguard’s balance sheet is strong,” said Mr. Davis, “and we ended the second quarter with $151 million in cash and marketable securities available to support the funding of our companies and for making acquisitions.”
“Safeguard’s strategy is to create long-term value for our shareholders by acquiring companies and helping them to develop by applying operational and management expertise,” said Mr. Craig. “We work closely with our companies to help them define their growth strategies and achieve their goals. We also recognize that young companies must invest to build growth. While these investments affect their profitability as well as Safeguard’s consolidated results, we believe that the investments will enhance the long-term values of our companies. As their enhanced values become apparent in growing revenues and profitability, we expect to have opportunities to realize the increased values through liquidity events.”
Web Cast
Safeguard will host a conference call and Web cast on August 4, 2005 at 9:00 a.m. (ET) to discuss second quarter 2005 results. Interested parties may access the live Web cast through the Safeguard Web site atwww.safeguard.com. Web participants are encouraged to go to the site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the Web cast will be archived and available at the Web site shortly after the call.
Safeguard will host a conference call and Web cast on August 4, 2005 at 9:00 a.m. (ET) to discuss second quarter 2005 results. Interested parties may access the live Web cast through the Safeguard Web site atwww.safeguard.com. Web participants are encouraged to go to the site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the Web cast will be archived and available at the Web site shortly after the call.
2
About Safeguard
Safeguard Scientifics, Inc. (NYSE: SFE) is a strategic growth partner for companies in the Time-to-Volumestage of development. Time-to-Volume companies are those that are generating revenues from a commercially viable product or service, and are facing new challenges as they scale their businesses to meet market opportunities. Focused primarily on the information technology and life sciences sectors, Safeguard generally acquires majority ownership interests in companies at this stage of growth. In addition to expansion capital, Safeguard provides its companies a wide range of operating and managerial expertise to drive their successful growth to become market leaders. For more information about Safeguard and its strategy, visitwww.safeguard.com.
Safeguard Scientifics, Inc. (NYSE: SFE) is a strategic growth partner for companies in the Time-to-Volumestage of development. Time-to-Volume companies are those that are generating revenues from a commercially viable product or service, and are facing new challenges as they scale their businesses to meet market opportunities. Focused primarily on the information technology and life sciences sectors, Safeguard generally acquires majority ownership interests in companies at this stage of growth. In addition to expansion capital, Safeguard provides its companies a wide range of operating and managerial expertise to drive their successful growth to become market leaders. For more information about Safeguard and its strategy, visitwww.safeguard.com.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. These forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, labor disputes, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. These forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, labor disputes, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.
3
Safeguard Scientifics, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Condensed Consolidated Balance Sheets
(in thousands)
| June 30, | December 31, | |||||||
| 2005 | 2004 | |||||||
| (unaudited) | ||||||||
Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents, restricted cash and marketable securities — Parent | $ | 151,252 | $ | 162,378 | ||||
| — Subsidiaries | 10,644 | 19,170 | ||||||
| Restricted marketable securities | 3,822 | 3,771 | ||||||
| Accounts receivable, net | 39,059 | 37,677 | ||||||
| Prepaid expenses and other current assets | 4,482 | 8,974 | ||||||
| Total current assets | 209,259 | 231,970 | ||||||
| Property and equipment, net | 44,606 | 45,135 | ||||||
| Ownership interests in and advances to companies | 33,723 | 35,311 | ||||||
| Long-term marketable securities | 4,891 | 11,964 | ||||||
| Long-term restricted marketable securities | 11,251 | 13,045 | ||||||
| Intangible assets, net | 8,871 | 10,855 | ||||||
| Goodwill | 93,204 | 93,049 | ||||||
| Other | 10,672 | 12,483 | ||||||
Total Assets | $ | 416,477 | $ | 453,812 | ||||
Liabilities and Shareholders’ Equity | ||||||||
| Lines of credit | $ | 18,710 | $ | 11,636 | ||||
| Current maturities of long-term debt | 3,652 | 3,820 | ||||||
| Other current liabilities | 42,452 | 47,026 | ||||||
| Total current liabilities | 64,814 | 62,482 | ||||||
| Long-term debt | 5,427 | 11,210 | ||||||
| Minority interest | 7,302 | 11,652 | ||||||
| Other long-term liabilities | 13,207 | 12,665 | ||||||
| Convertible senior debentures | 150,000 | 150,000 | ||||||
| Total shareholders’ equity | 175,727 | 205,803 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 416,477 | $ | 453,812 | ||||
Certain prior year amounts have been reclassified to conform to the current year presentation.
Safeguard Scientifics, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenue | ||||||||||||||||
| Product sales | $ | 3,475 | $ | 1,838 | $ | 5,506 | $ | 4,079 | ||||||||
| Service sales | 44,535 | 38,013 | 85,348 | 74,769 | ||||||||||||
| Total revenue | 48,010 | 39,851 | 90,854 | 78,848 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of sales — product | 984 | 1,087 | 1,723 | 2,265 | ||||||||||||
| Cost of sales — service | 31,410 | 24,098 | 61,573 | 48,157 | ||||||||||||
| Selling, general and administrative | 20,228 | 25,590 | 41,630 | 48,030 | ||||||||||||
| Research and development | 2,603 | 3,090 | 5,492 | 6,743 | ||||||||||||
| Amortization of intangibles | 894 | 790 | 1,832 | 1,909 | ||||||||||||
| Total operating expenses | 56,119 | 54,655 | 112,250 | 107,104 | ||||||||||||
| Operating loss | (8,109 | ) | (14,804 | ) | (21,396 | ) | (28,256 | ) | ||||||||
| Other income, net | 1,259 | 29,998 | 1,250 | 40,477 | ||||||||||||
| Impairment — related party | (102 | ) | — | (260 | ) | — | ||||||||||
| Interest Income | 1,148 | 522 | 2,279 | 974 | ||||||||||||
| Interest expense | (1,564 | ) | (2,500 | ) | (3,100 | ) | (5,678 | ) | ||||||||
| Equity loss | (1,376 | ) | (3,927 | ) | (5,407 | ) | (6,301 | ) | ||||||||
| Minority interest | 1,215 | 971 | 2,851 | 3,342 | ||||||||||||
| Net income (loss) from continuing operations before income taxes | (7,529 | ) | 10,260 | (23,783 | ) | 4,558 | ||||||||||
| Income tax (expense) benefit | (150 | ) | (89 | ) | 11 | (129 | ) | |||||||||
| Net income (loss) from continuing operations | (7,679 | ) | 10,171 | (23,772 | ) | 4,429 | ||||||||||
| Discontinued operations, net of income taxes | — | (22,632 | ) | — | (21,524 | ) | ||||||||||
| Net Loss | $ | (7,679 | ) | $ | (12,461 | ) | $ | (23,772 | ) | $ | (17,095 | ) | ||||
| Basic income (loss) per share from continuing operations | $ | (0.06 | ) | $ | 0.08 | $ | (0.20 | ) | $ | 0.04 | ||||||
| Basic loss per share from discontinued operations | — | (0.18 | ) | — | (0.18 | ) | ||||||||||
| Basic net loss per share | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.20 | ) | $ | (0.14 | ) | ||||
| Diluted income (loss) per share from continuing operations | $ | (0.06 | ) | $ | 0.08 | $ | (0.20 | ) | $ | 0.04 | ||||||
| Diluted loss per share from discontinued operations | — | (0.18 | ) | — | (0.18 | ) | ||||||||||
| Diluted net loss per share (a) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.20 | ) | $ | (0.14 | ) | ||||
| Weighted average shares outstanding from continuing operations | ||||||||||||||||
| Basic | 120,779 | 119,854 | 120,714 | 119,735 | ||||||||||||
| Diluted | 120,779 | 121,088 | 120,714 | 121,642 | ||||||||||||
| Weighted average shares outstanding from discontinued operations | ||||||||||||||||
| Basic and Diluted | 120,779 | 119,854 | 120,714 | 119,735 | ||||||||||||
Certain prior year amounts have been reclassified to conform to the current year presentation.
As a result of the sale of CompuCom, in October 2004, the results of CompuCom are shown as a discontinued operation for all periods presented.
As a result of the sale of CompuCom, in October 2004, the results of CompuCom are shown as a discontinued operation for all periods presented.
(a) If a consolidated or equity method company has dilutive options or securities outstanding, dilutive net loss
per share is computed first by deducting from net loss the income attributable to the potential exercise of the
dilutive options or securities of the company.
per share is computed first by deducting from net loss the income attributable to the potential exercise of the
dilutive options or securities of the company.
Safeguard Scientifics, Inc.
Results of Segment Operations from Continuing Operations
(in thousands)
Results of Segment Operations from Continuing Operations
(in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Revenues | ||||||||||||||||
| Alliance | $ | 21,473 | $ | 23,779 | $ | 43,256 | $ | 47,259 | ||||||||
| Clarient | 5,209 | 2,391 | 9,216 | 4,322 | ||||||||||||
| Laureate Pharma | 3,792 | — | 6,437 | — | ||||||||||||
| Mantas | 8,088 | 5,495 | 15,173 | 11,128 | ||||||||||||
| Pacific Title | 9,448 | 8,186 | 16,772 | 14,861 | ||||||||||||
| Other Companies | — | — | — | 1,278 | ||||||||||||
| Total Segment Results | $ | 48,010 | $ | 39,851 | $ | 90,854 | $ | 78,848 | ||||||||
Operating Income (Loss) (a) | ||||||||||||||||
| Alliance | $ | 48 | $ | (1,989 | ) | $ | (512 | ) | $ | (2,242 | ) | |||||
| Clarient | (3,246 | ) | (5,473 | ) | (7,442 | ) | (9,196 | ) | ||||||||
| Laureate Pharma | (2,708 | ) | — | (5,900 | ) | — | ||||||||||
| Mantas | (776 | ) | (4,309 | ) | (2,421 | ) | (8,515 | ) | ||||||||
| Pacific Title | 2,190 | 1,606 | 3,112 | 2,258 | ||||||||||||
| Other Companies | — | — | — | (1,396 | ) | |||||||||||
| Total Segment Results | (4,492 | ) | (10,165 | ) | (13,163 | ) | (19,091 | ) | ||||||||
| Other Items | (3,617 | ) | (4,639 | ) | (8,233 | ) | (9,165 | ) | ||||||||
| $ | (8,109 | ) | $ | (14,804 | ) | $ | (21,396 | ) | $ | (28,256 | ) | |||||
Safeguard Share of Net Income (Loss) from Continuing Operations (b) | |||||||||||||||||||||||||||
| Alliance | $ | (163 | ) | $ | (2,064 | ) | $ | (863 | ) | $ | (2,375 | ) | |||||||||||||||
| Clarient | (1,994 | ) | (3,349 | ) | (4,532 | ) | (5,846 | ) | |||||||||||||||||||
| Laureate Pharma | (2,788 | ) | — | (6,043 | ) | — | |||||||||||||||||||||
| Mantas | (775 | ) | (5,246 | ) | (2,428 | ) | (8,839 | ) | |||||||||||||||||||
| Pacific Title | 2,485 | 1,346 | 3,345 | 1,968 | |||||||||||||||||||||||
| Other Companies (c) | (1,484 | ) | 27,021 | (5,506 | ) | 35,571 | |||||||||||||||||||||
| Total Segment Results | (4,719 | ) | 17,708 | (16,027 | ) | 20,479 | |||||||||||||||||||||
| Other Items (d) | (2,960 | ) | (7,537 | ) | (7,745 | ) | (16,050 | ) | |||||||||||||||||||
| Net Income (Loss) from Continuing Operations | $ | (7,679 | ) | $ | 10,171 | $ | (23,772 | ) | $ | 4,429 | |||||||||||||||||
(a) Operating Income (Loss) represents the revenues less operating expenses of each
segment, and excludes any allocation to minority interest.
segment, and excludes any allocation to minority interest.
(b) Safeguard Share of Net Income (Loss) from Continuing Operations includes the net
results of each segment, including interest, adjusted for any amount allocated to minority
interest.
results of each segment, including interest, adjusted for any amount allocated to minority
interest.
(c) Other Companies includes those companies in which Safeguard has less than a
majority interest, as well as our ownership in funds. Our share of Other Companies
consists primarily of equity income (loss) and gains (loss) on companies, both of which are
reported below the operating income (loss) line.
majority interest, as well as our ownership in funds. Our share of Other Companies
consists primarily of equity income (loss) and gains (loss) on companies, both of which are
reported below the operating income (loss) line.
(d) Other Items includes corporate expenses and income taxes.